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Republic Airways seeks relief by freeing itself of leases

June 1, 2016

As it continues to work through its Chapter 11 bankruptcy reorganization, Indianapolis-based Republic Airways Holdings Inc. is seeking to get out of leases for 29 of its airplanes and two facilities.

The move is not unexpected—even before Republic filed for bankruptcy protection in February, the company had been trying to restructure its fleet. It aims to move away from smaller, 50-seat-or-less regional jets in favor of larger ones.

“An integral step in Republic’s restructuring is its plan to streamline its operations by operating a single aircraft type (E170/175) by returning out-of-favor aircraft, like the ERJ 140/145 aircraft,” the company said in court documents filed Tuesday.

Republic operates a fleet of smaller planes that fly routes for large carriers, such as American, Delta and United. As of March 31, Republic’s operational fleet stood at 222 aircraft.

Republic’s bankruptcy case is being handled in U.S. Bankruptcy Court in the Southern District of New York.

Details on what Republic is hoping to do:

— The airline wants to reject its leases with G.E. Capital Aviation Services LLC for 28 Embraer regional jets and nine spare engines. All of the regional jets are either ERJ 140s or ERJ 145s.

The aircraft are currently located at a repair and storage facility in Kingman, Arizona. The engines are in Kingman, Louisville, and in Columbus, Ohio.

Republic said it has already reached an agreement with Delta to “wind down flying of this aircraft type (ERJ 140 and ERJ 145) over the next few months.”

— Republic also seeks to reject a lease with Dougherty Air Trustee LLC. This lease is for a single aircraft, an Embraer ERJ 170. Republic said it was unable to reach an agreement with Dougherty to restructure lease terms for this aircraft.

— The airline wants to give up its leases for property in Milwaukee and Denver.

Republic and its predecessor, Midwest Airlines, have had a presence at Milwaukee’s General Mitchell International Airport since 1988, according to court filings. Republic used the facility for maintenance until 2011, and has been using it for storage since then. The airline said it’s tried for more than two years to find a party to take over its lease but has been unable to do so.

Republic has leased space at Denver International Airport since 2013. The airline used that facility mostly to service its fleet of Bombardier Q-400 planes. Republic said it gave up the leases to those planes in April, so it no longer needs the Denver facility.

Exiting these real estate leases, Republic said, will save it more than $1 million per year.

Calls to Republic and the U.S. Bankruptcy trustee’s office were not immediately returned Wednesday.

A court hearing on all three of these motions is scheduled for June 15.
 

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